MLS has issued a memo to its teams and league staff instructing them to prepare for a work stoppage.
The memo, sent by MLS president and deputy commissioner Mark Abbott, comes ahead of a Jan. 29 (midnight, Jan. 28) deadline to negotiate a revised collective bargaining agreement (CBA) between MLS and the MLS Players Association. If the league follows through with its threat to lock players out, it would be the first work stoppage in MLS history.
The memo, a copy of which was obtained by ESPN, said: "The January 29 deadline provides all constituents -- the League, the clubs, and the players -- adequate time to prepare for the upcoming season. At this point, however, we are required to plan for the possibility that the CBA may be terminated and that a work stoppage could occur. Therefore, we will be providing the clubs with guidance later today regarding the rules that must be followed during any such work stoppage.
"We want to be clear -- our hope is to reach an agreement and avoid a work stoppage. But we must be prepared in the event that we are unable to reach an agreement. We understand the challenges that COVID-19 has created for families in the United States and Canada, around the world, and in our MLS community. While we are not required to do so, in the event of a work stoppage, we plan to continue to provide health insurance and pay for those health care premiums for the players and their families."
An attempt to reach the MLSPA for comment was unsuccessful.
The two sides have been locked in CBA negotiations ever since MLS invoked a force majeure clause on Dec. 29. The clause, once invoked, allows the two sides a 30-day window to agree on an amended CBA. The clause can be invoked in the case of an economic catastrophe, like one brought on by a pandemic. The league said it activated the clause due to concern that the relatively slow rollout of the COVID-19 vaccine will result in few fans being able to attend games this season. Given MLS' reliance on game-day revenues, the lack of fans would cut deeply into finances. The league has said that it sustained losses of nearly $1 billion in 2020, $725 million of which was due to the pandemic.
The MLSPA has countered that MLS invoked the force majeure out of "financial opportunism" rather than "financial necessity" and highlighted how the concessions made last June have had a ripple effect into future years, including 2021.
The reopening of negotiations marks the third time in the past year that the two sides have been involved in CBA talks. The two sides reached an agreement in principle last February, but neither side formally ratified the deal. When the COVID-19 pandemic hit, MLS reopened negotiations, with the two sides agreeing on a revised deal last June.
If the window concludes without a new deal being struck, either side could opt to nullify the CBA, though MLS is the side most likely to follow through on such a maneuver. It is possible for talks to continue past the deadline if both sides feel progress is being made.
MLS followed up the invoking of the force majeure with an offer to the MLSPA on Jan. 5. In exchange for no cuts to salaries, MLS was asking the players to allow a freeze on the growth of the salary cap between 2020 and 2021 while also extending the length of the deal for an additional two years through the end of the 2027 season. MLS said the restructuring would save league between $100 million and $110 million over the life of the CBA. This would have been on top of what the MLSPA says are $150 million in concessions the players made last June when the most recent CBA was agreed upon. That deal also included a freeze of the salary cap from 2020 to 2021.
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The two-year extension would last beyond the 2026 World Cup, which is being co-hosted by the United States, Canada and Mexico -- a tournament that it is hoped will accelerate investment in the game in North America. For that reason, MLS is hoping to reduce its expenses while the MLSPA wants to be in a position to maximize its share of the spoils.
Sources told ESPN that the MLSPA pushed back on the league's offer last Friday. In its counteroffer, the MLSPA is offering to modify the size of the salary cap in future years without any mention of extending the CBA.
The two sides then met Monday night, with the league announcing it had submitted a counteroffer of its own to the MLSPA. Sources told ESPN that the league is sticking to its desire to extend the CBA by two years but would allow a more rapid increase in the salary cap during the deal's later years. When the two sides agreed to a CBA last February, the deal allowed for the salary cap to increase from $8.49m to $11.64m over the life of the five-year agreement. That comes out to an average increase of $630,600 per year.
Ever since the league invoked the force majeure clause there have been contrasting approaches to the pace of talks. MLS has insisted that there needs to be more urgency given that the window is due to close on Jan. 29, while the MLSPA insists that the date isn't a hard deadline.
A source with knowledge of the situation said that the league is expecting the MLSPA to submit another counteroffer prior to the deadline.
MLS training camps are scheduled to open on Feb. 22, with the regular season to begin on April 3.